Such a broker is a kind of financial advisor who is expert in assisting people find a home loan is known as a mortgage broker. Once the selection of a home loan is done, your perfect mortgage broker can also help in managing the application process for you. Moreover, they are specialized in providing personalized advices throughout the process to help you secure your home loan.
What does a mortgage broker do?
A mortgage broker basically works as a channel between the borrower and the lender. Their main task is to evaluate all your financial matters, draw up an image of your credit-worthiness, and to help you identify the kind of home loan that will be perfectly suitable for you.
They have to offer you a range of home loan options from the board of home loan lenders they work for. Usually, mortgage brokers offer lending products from various financial institutions, not all the lenders in the sector, so you should always remember this before coming to a decision
Due to the access they have to several products, they will most probably have access to a product that will perfectly suit your needs. Moreover, they will discuss and understand your goals by spending the time with you to give details about the perfect option and to provide help with the paperwork. They have the potential to provide you a valuable service.
Why use a mortgage broker?
Being a mediator between the borrower and lender, mortgage brokers are very beneficial and valuable in case you are not certain about your understanding of mortgaging or finance. A perfect way to find the best value home loan is by hiring a mortgage broker as per your personal financial situation. You just need to make sure that you select your mortgage broker very carefully!
Taking help of a mortgage broker that fits your financial circumstances can be a good move for many people. However, you must prudently consider the pros and cons and check if the broker you have chosen is qualified enough with suitable experience necessary to find the best product for you.
Advantages of using a mortgage broker
- A mortgage broker can possibly be a valuable resource for people having a poor understanding of mortgage and finance industry, or their personal financial matters.
- A mortgage broker is capable of finding you a mortgage that perfectly suits your individual financial circumstances and affairs.
- In case you don’t have enough time to conduct a thorough research that is required to properly evaluate the range of available home loan products, a mortgage broker is able to do this for you.
Cons of using a mortgage broker
- A mortgage broker work on behalf of the lender that pays them and they are likely to advise you products from only a few lenders. It is possible that it doesn’t give you a rational idea of the variety of products suitable for you.
- Industry experience and academic qualifications can vary widely between the brokers. Ensure to investigate about everything before engaging the service of any broker.
Do they understand what you need?
Ideally, you should ask a lot of questions to your mortgage broker, however, you need to answer a few as well. For a mortgage broker to advice a suitable loan as per your requirements, they need to understand what actually you are looking for.
Reasons you are refinancing and if you plan on staying in that property for a long time period? If you are willing to renovate the property? Giving an idea of your future aims to your broker will help them find a suitable home loan for you.
Mortgage Broker vs. Banker
Mostly, mortgage brokers possess strong negotiating skills and they can often get you reduced interest rates as compared to what your bank is offering.
Your bank will try and provide you a suitable interest rate but they will only offer it to the borrowers that they consider “low-risk” for instance, the ones with a perfect financial and credit history, a stable income and a good deposit.
Even if you are an existing customer, it also helps.
Even in that case, it’s not certainly the best discount you can get when you contemplate that there are over 40 lenders in Australia.
Banks really want the broker business for that they are willing to fight hard.
Pros of using a mortgage broker
They will gather the evidence of your income and other required documents that must be submitted as a part of your application process and look after the entire procedure from application to settlement. It includes:
- Collaborating with the credit officers in order to provide additional evidence they might require to evaluate your application.
- Communicating with your attorney, valuers and your builders and even real-estate agents to guarantee a flawless application process.
- As your single point of contact throughout the process and being in touch at every stage, so you are aware of all the goings-on.
When an efficient bank staff works in collaboration with mortgage brokers, a borrower will get the best of both services.